3. Mel, an agent for a dress shop, orders one hundred dresses from SAG Manufacturing for the April Sale. There is no specific agreement in the sale contract indicating when title will pass to the department store. The title will pass to the department store when

a. Mel signs the contract.

b. Mel and the SAG's agent sign the contract.

c. SAG physically delivers the dresses to the department store.

d. Mel pays SAG for the dresses.

4. Frank contracts with Bumper Cars, Inc. to buy five bumper cars. The contract lists the five cars as BC001, BC002, BC003, BC004, BC005. Identification

a. requires that Foster verify his identity to take possession of the carts.

b. has taken place.

c. cannot take place until the contract is reviewed by a court.

d. will take place only when Foster pays for the golf carts.

5. Glenda's Hat Products, Inc., and Harry Haberdashery Stores enter into a contract for a sale of hot tubs. Under a shipment contract, the seller must

a. allow the buyer to reject the goods for any reason.

b. deliver the goods to a particular destination.

c. inspect the goods before shipping them.

d. place the goods into the hands of a carrier.

6. Heat Products Corporation and King Coils Inc.com enter into a contract for a sale of portable heating units. Under a destination contract, the seller must

a. allow the buyer to reject the goods for any reason.

b. deliver the goods to a particular destination.

c. inspect the goods before tendering their delivery.

d. place the goods into the hands of a carrier.

7. Sandy has a checking account at Shore Bank. Sam buys her roommate Sally's two tickets to a Broadway musical for $200. Sandy writes Sally a check for the tickets. In this situation, Shore Bank is

a. the drawee.

b. the indorser.

c. the payee.

d. the drawer.

8. Enders Bank is both the drawer and the drawee with regard to a draft issued to Frank The draft is

a. a certificate of deposit.

b. a cashier's check.

c. a nonnegotiable instrument.

d. a promissory note.

9. Ray negotiates a bearer instrument to Sam by

a. assignment.

b. delivery.

c. indorsement.

d. promising to pay it.

10. Benny obtains a check payable to his order from Charlie. For Benny to negotiate this order instrument to Dirk requires

a. indorsement and delivery.

b. assignment and a promise to pay.

c. presentment and dishonor.

d. good faith and value.

11. Ray negotiates a bearer instrument to Sam by

a. assignment.

b. delivery.

c. indorsement.

d. promising to pay it.

12. Benny obtains a check payable to his order from Charlie. For Benny to negotiate this order instrument to Dirk requires

a. indorsement and delivery.

b. assignment and a promise to pay.

c. presentment and dishonor.

d. good faith and value.

13. Benjamin Construction Company performs a contract with Carla to add a garage to her house, but she does not pay. In most states, Benjamin Construction could create a lien and place it on Carla's property by filing

a. a creditor's composition agreement.

b. a writ of attachment.

c. a writ of execution.

d. a written notice of lien.

14. Paula owes Benji $500 on her contract, but refuses to pay. To collect, Benji files a mechanic's lien. Under a mechanic's lien, security for the is represented by

a. Paula's personal property.

b. Paula's real estate

. c. the $500 owed under the contract.

d. the contract.

15. Kenny is a sole proprietor of Neptune's Sea Shop. As a sole proprietor, on the business's profits, Kenny pays

a. no income taxes.

b. only personal income taxes.

c. only business income taxes.

d. both personal and business income taxes.

16 . Jackson Lumber Inc., sells a franchise to Jades Lumber Yard, Inc. Jades Lumber Yard is

a. a franchisee.

b. a franchisor.

c. an agent.

d. a principal.

17. Raul is interested in buying a franchise from Tiny Houses Inc. For Raul to make an informed decision concerning this purchase, Tiny Houses must disclose in writing or online

a. general estimates of costs and sales, but not the basis for them.

b. material facts such as the basis of projected earnings figures

c. no information.

d. start-up requirements, but not renewal conditions.

18. Ed is interested in from Debbie Donuts Company. In this transaction, the Federal Trade Commission's Franchise Rule

a. does not apply.

b. enables Ed to weigh the deal's risks and benefits.

c. enables Debbie Donuts to weigh the deal's risks and benefits.

d. prohibits certain types of anticompetitive agreements.

Fact Pattern 36-1 (Questions 19 and 20 apply) Jake's Jumble Playgrounds Inc. offers entrepreneurs the opportunity to operate a franchise under the Jake's Jumble trade name as a member of a select group of dealers that engage in retail juice sales.

19. Refer to Fact Pattern 36-1. To potential investors, Jake's Jumble must provide

a. actual earnings figures.

b. hypothetical earnings figures.

c. projected earnings figures.

d. none of the choices.

20. Refer to Fact Pattern 36-1. Jake's Jumble makes earnings claims to potential investors. For those claims, the franchisor

a. can have a hypothetical basis.

b. must have a reasonable basis.

c. must have an actual basis.

d. can have any or no basis.

21. Jasmine Clothing Company wants to present information in "disclosure documents" via the Internet to prospective franchisees. Among other legal requirements with which Jasmine Clothing must comply, prospective franchisees must

a. agree to settle any lawsuits that may arise over the documents.

b. be able to download or save all .

c. provide e-mail addresses for Jasmine Clothing to verify users' authenticity.

d. register with the Federal Trade Commission via Jasmine Clothing's Web site.

22. Rafi, a director of Super Service Station Corporation, does not attend a board meeting for three years. During that time, Twyla, Super's president, makes improper loans that cost the company $100,000. Rafi is most likely

a. liable for negligence or mismanagement.

b. liable for violation of the business judgment rule.

c. not liable because missing meetings is an honest mistake.

d. not liable because missing meetings is only poor judgment.

23. Lewis is a director of Mines & Refineries, Inc. Using information that is not available to the public, Lewis makes a profit trading in Mines & Refineries stock. Lewis is most likely liable for breach of

a. no duty or rule

b. the business judgment rule.

c. the duty of loyalty.

d. the duty of care.

24. Paul and Quinn do business as partners in Restore Homes, a residential construction firm. For federal income tax purposes, Restore Homes would be treated as

a. a pass-through entity.

b. a natural person.

c. a tax-paying entity.

d. a partnership by estoppel.

25. Selena and Juan agree while talking on the phone to form a partnershipThe Financial Plannersto deal in transfers of real property. To be enforceable, their agreement must

a. be filed in the appropriate state office.

b. be in writing.

c. involve the exchange of valid consideration.

d. not involve a third party.

26. Bellamy Fencing and Jays Lumber Yard, share officers, directors, employees, property, and equipment. In reliance on Bellamy Fencing, Zak's Delivery Inc. contracts to perform services for Jays Lumber Yard, but the firm does not pay. In terms of liability to Delivery Transport, a court is most likely to treat Bellamy Fencing and Jays Lumber Yard as

a. a pass-through entity.

b. a natural person.

c. a tax-paying entity.

d. a partnership by estoppel.

27. Quintin and Ryanna are partners in Plato's Bookshop, which sells books and runs a cafe. Quintin manages the business. Unless the partnership agreement states otherwise, Quintin is

a. entitled to compensation in proportion to her effect on the business.

b. entitled to compensation in proportion to her effort.

c. entitled to compensation in proportion to her capital contribution.

d. not entitled to compensation.

28. Cal, a partner in Alba Cakes and Pastries, applies for a loan with Northfield Bank allegedly on the firm's behalf but without the authorization of the other partners. Northfield knows that Cal is not authorized to take out the loan. If Cal defaults on the loan, liability for its unpaid amount will be imposed on

a. Cal and Alba, jointly.

b. Cal only.

c. Alba only.

d. Northfield only.

29. Omar is a partner in Atlantic Tea Gardens. In the majority of states, with respect to any Atlantic Tea Gardens partnership obligations that Omar does not participate in, know about, or ratify, Omar would be liable for

a. none of the obligations.

b. all of the obligations, jointly and severally.

c. all of the obligations, jointly but not severally.

d. only the contractual obligations.

30. Bellami Corporation and Calzonia Italian Cheese, Inc. agree to combine all assets, stock, and personnel into a new firm to be called D'Italia, Inc. This is a.

a consolidation.

b. a merger.

c. a share exchange.

d. a takeover.

31. Lamborgani, Inc and Cars R Us, Inc. plan to consolidate. Most likely, the articles of consolidation will be filed with

a. the county recording office.

b. the local retailers' association.

c. the state's secretary of state.

d. the U.S. Department of Commerce.

32. Caldonia Credit & Finance is a limited partnership. Dany, Elli and Ima are the general partners. Dany dies. The partnership can

a. continue only after a distribution of its assets.

b. continue only as a general partnership.

c. continue only if Elli and Ima consent.

d. not continue because Dany's death dissolves the firm.

33. Bruno is a general partner in Spider Electric, LLLP, a limited liability limited partnership, which cannot pay its debts. Bruno is personally liable for the debts

a. in proportion to the number of partners in the firm.

b. to no extent.

c. to the extent of his capital contribution.

d. to the full extent.

Extra Credit Each fully correct answer is worth 2 points. Your answers must be in paragraph form, full sentences, proper grammar, spelling and punctuation. Define and explain the law and apply it to the facts.

Reviewing: All Forms of Partnerships Grace Tarnavsky and her sons, Manny and Jason, bought a ranch known as the Cowboy Palace in March 2014, and the three verbally agreed to share the business for five years. Grace contributed 50 percent of the investment, and each son contributed 25 percent. Manny agreed to handle the livestock, and Jason agreed to handle the bookkeeping. The Tarnavskys took out joint loans and opened a joint bank account into which they deposited the ranch's proceeds and from which they made payments for property, cattle, equipment, and supplies. In September 2017, Manny severely injured his back while baling hay and became permanently unable to handle livestock. Manny therefore hired additional laborers to tend the livestock, causing the Cowboy Palace to incur significant debt. In September 2018, Al's Feed Barn filed a lawsuit against Jason to collect $32,400 in unpaid debts. Using the information presented in the chapter, answer the following questions.